AES to Invest Up to $400 Million Equity Per Year on Growth Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--AES Corporation (NYSE:AES) (Arlington, Virginia) will invest $300 million to $400 million in annual equity on "attractive growth projects" as it moves forward, the international power provider's top executive said Monday. Industrial Info is tracking 110 active AES projects worth $16.3 billion. This includes 74 projects worth nearly $6.7 billion that are under construction and engineering; and 36 projects worth about $9.6 billion that are in the planning phases, where a variety of factors could alter their outcome.

AES currently has power projects totaling 5,839 megawatts (MW) under construction and on track to be brought on line through 2018, with 77% of that amount in the Americas.

AES reported its second-quarter 2015 net income fell 48% to $69 million from a year earlier, largely as a result of the timing of planned maintenance; lower demand in Brazil due to recession and drought; and impact of the stronger U.S. dollar. The company reported total revenue of $3.86 billion in the second quarter, down 11% from the same quarter last year.

Speaking during the company's earnings conference call, Chief Executive Officer Andres Gluski said: "Looking at growth opportunities beyond our projects currently under construction, all of which we expect to complete by 2018, our future project mix is likely to be heavily weighted toward natural gas and renewables, while using our platforms to provide energy storage, desalination and LNG [liquefied natural gas]-related services."

He noted the company now has 86 MW of installed battery-based energy storage capacity, and recently broke ground on three new energy storage projects totaling 40 MW in three countries. In all, the company has 70 MW of energy storage under construction that is expected to be brought online through 2016, and 200 more MW in late-stage development.

"Based on all the opportunities we see across our portfolio, we believe we can invest $300 million to $400 million of AES equity in attractive growth projects each year, which is consistent with the amount of equity we are currently contributing to our growth projects," Gluski said.

Second-quarter capital expenditures (capex) amounted to $549 million, compared with $509 million in the same quarter of 2014. In April, the company's 1,142-megawatt (MW) Mong Duong 2 power plant in Vietnam began commercial operations six months early and under budget, AES reported. Mong Duong 2 has a 25-year power purchase agreement with a state-owned utility. The project had a total investment value of $2 billion.

For related information, see May 12, 2015, article - AES Corporation Progresses on Key Overseas Projects in First-Quarter 2015, Looks Forward to $7 Billion in Plans.

In the U.S., AES Southland LLC plans to build a 642-MW, natural gas-fired, combined-cycle unit at the existing Alamitos Power Station in Long Beach, California. Construction of the $963 million project would begin in first-quarter 2017, with completion in first-quarter 2020. CH2M Hill (Meridian, Colorado) is the engineer for the project, and Power Engineers (Hailey, Idaho) is serving as project consultant.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and ten international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.